Norris CoHas Developed an Improved Version of Its Most Popular Product

question 56

Multiple Choice

Norris Co.has developed an improved version of its most popular product.To get this improvement to the market will cost $48 million but the project will return an additional $13.5 million for 5 years in net cash flows.The firm's debt-equity ratio is .25,the cost of equity is 13 percent,the pretax cost of debt is 9 percent,and the tax rate is 21 percent.All interest is tax deductible.What is the net present value of this proposed project?

• A)$906,411
• B)$902,459
• C)$879,838
• D)$884,318
• E)$889,760

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Definitions:

SSRIs

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Anorexia Nervosa

An eating disorder characterized by an obsessive fear of gaining weight, resulting in severe restrictions on food intake and excessive weight loss.

Bulimia Nervosa

An eating disorder characterized by episodes of binge eating followed by inappropriate compensatory behaviors such as purging, fasting, or excessive exercise.